India: Roche Cipla Appeal: Upheld In Favour Of Cipla

An appeal was filed by F. Hoffmann-La Roche Ltd. (`Roche')
and OSI Pharmaceuticals Inc. (`OSI') against the earlier
judgment of the learned Single Judge of the High Court of Delhi
(dismissing I.A. No. 642/2008 in suit CS (OS) No.89/2008) wherein
their prayer for the grant of an interim injunction to restrain
Cipla Ltd. from manufacturing, offering for sale, selling and
exporting the drug Erlotinib was declined. The impugned judgment
had however directed Cipla to maintain accounts of sale and file in
Court every quarter accounts (duly authenticated by CAs including
tax returns) so as to assess damages accruing to Roche in the event
of the suit being decreed.

Roche in the plaint filed in the suit CS (OS) No. 89 of 2008,
had stated that its co-plaintiff OSI jointly owned a patent with
Pfizer Products Inc. in respect of a drug molecule, claimed to be a
major breakthrough and innovation in the treatment of cancer.
According to Roche, the drug has depicted an increase in the
survival benefit and is administered in the form of a tablet under
the trademark and commercial name of 'Tarceva' which is
registered in the name of Roche. The drug formulation was also
claimed to have acquired approval from the USFDA (United States
Food & Drug Administration). OSI along with Pfizer had moved to
the Controller General of Patents, New Delhi who granted them a
patent in respect of the drug. Subsequently, Roche entered into
development collaboration and licensing agreement with OSI whereby
Roche was granted licence to use and sell and offer for sale the
licensed products of the former including Erlotinib. Roche was
further licensed and authorized to cause enforcement of any
infringement of property rights of any of the products of OSI.
Roche claimed to have introduced Tarceva in India around April 2006
with wide publicity by the media owing to its importance in cancer
treatment.

It was further stated that Cipla Ltd. launched the generic
version of Tarceva (Erlotinib) in India, around January, 2008 and
through a news daily learnt of Cipla's plans to infringe and
violate their rights. Roche claimed that Tarceva had been developed
after enormous investment in R &D and that owing to legal
rights in the same Cipla could not violate their rights vested
therein. The suit was said to have been valued at Rs. 20 Lakhs and
damages were tentatively valued at Rs. 1 Crore.

Cipla in response had filed a counter-claim along with a prayer
for the revocation of the patent granted to Roche. They averred
Roche' patent to be "completely invalid". Section
3(d) of the Patent Act was brought to light and the drug in
question was said to be a derivative of a known patent
"Quinazoline", and the two displaying the exact chemical
structure as found except for one substitution which is
"obvious to any person skilled in the art". Cipla also
claimed that Roche had failed to prove "any improved efficacy
of the said drug" and that no invention or inventive step in
the patent could be attributed.

Bringing to fore the pre-conditions for a recently granted
patent claim to be protected was that it ought to be "worked
fully and commercially". It was pointed out that though Roche
acquired approval to import and sell the drug in December 2005, yet
as on date the product was neither easily available nor affordable
due to its high pricing. Cipla in its written statement had also
pleaded the ground of public interest, in view of Roche' drug
Tarceva costing Rs.4, 800/- per tablet while Cipla's Erlocip
was priced at Rs.1, 600/-; the latter being cheaper and more
affordable.

Cipla in its counter-claim filed contended Section 2 (1) (ta) of
the Patents Act 1970, defining the expression 'pharmaceutical
substance' as "any new entity involving one or more
inventive steps" and under Section 2 (1) (l) describing a
"new invention". They stated that a special scrutiny in
the light of these provisions was called for. Further, Cipla
averred that relevant data to portray enhanced activity over the
closest compound of the prior art had not been adduced as also data
to demonstrate the claimed compound had a higher therapeutic
efficacy.

A reference was made to U.S.'221 which clearly stated that
the compound Erlotinib Hydrochloride was a mixture of two
polymorphs A&B and that one needed to separate and purify the B
polymorph so as to get to the claimed compound for acceptable
efficacy. It was stated that subsequent patent clearly defeated the
inventive step of the alleged invention.

Cipla had filed an application under O VII R 11 CPC before the
learned Single Judge seeking dismissal of the suit. Cipla had also
discovered that Roche had made two further applications for grant
of patent in respect of the same chemical compound for a different
crystal form which was termed by Roche as B polymorph. The Single
Judge on taking due consideration of all factors ruled in favour of
Cipla and denied an injunction to Roche, giving due importance to
pricing and the public interest factor.

This court while admitting the appeal did not stay the operation
of the impugned judgment. However, it restrained Cipla from
exporting Erlocip to countries where Roche had a patent during the
pendency of the appeal.

While addressing the appeal, one of the significant issues posed
by Cipla, which had a bearing upon whether Roche having made out a
prima facie case for grant of injunction, is that the specification
for the suit patent (i.e. patent No.196774 corresponding to
U.S.'498) showed that it was in respect of Erlotinib
Hydrochloride Polymorphs A+B which was on their own showing an
unstable form which could not be administered as such. It was
contended that the case of Roche was that it was Polymorph B which
was the more stable form of the compound which could be
administered in the tablet form. The x-ray diffraction pattern of
the tablet Tarceva showed that it corresponded to Polymorph B for
which the plaintiff n of Polymorphs A and B. Roche averred that a
separate application for grant of patent in respect of Polymorph B
had been made. As regards non-mention of these facts before the
learned Single Judge they submitted that the application for
Polymorph B was independent of the patent validly granted to the
plaintiffs in respect of Polymorphs A and B.s did not yet hold a
patent. Roche' application for the grant of patent for
Polymorph B was pending consideration. It was further submitted
that even a prima facie case was made out by Roche since they were
seeking an injunction against Cipla in respect of a drug for which
they did not yet hold a patent. This fact had not been revealed by
Roche before the Controller of Patents as well as in the suit. The
Court opined that ground was sufficient to refuse an injunction.
Further it was averred that Polymorph B form of Erlotinib
Hydrochloride (marketed as Tarceva) was not known to Roche at the
time they applied for a patent for Erlotinib Hydrochloride as a
combination of Polymorphs A and B. Therefore it was averred that
Polymorph B could not be said to be subsumed in the compound of a
combination

In the absence of this issue having been raised before the
Single Judge, the present Court took note of the same. They noted
that by the time the Ld. Single Judge took up for consideration
I.A. No. 642/2008 filed by Roche seeking the ad interim injunction,
Cipla had proceeded to file I.A. No. 1272/2008 under Order 7 Rule
11 CPC. Cipla at both fora raised the plea that the suit patent
pertained to Polymorph A + B whereas Tarceva was Polymorph B. The
Court noted that the plea concerning Polymorph B was noticed by the
learned single Judge in the passing, but had no occasion to
consider whether this was a relevant factor for determining if
Roche had made out a prima facie case for grant of injunction in
their favour.

Roche had clarified in a letter to the Controller of Patents
that while in the U.S.A "it is perfectly possible and
routinely done to patent incremental inventions e.g. Polymorph B of
the main compound in addition to the main/dominating/umbrella
compound", in India this is possible only subject to the
conditions specified in Section 3 (d) of the Patents Act 1970 being
satisfied. They also asserted that Polymorph B was
thermodynamically more stable and provide improved oral dosage.

The Court opined that from Roche' own showing it would not
have been possible for the Controller to have granted a patent in
their favour both in respect of Polymorphs A+B as well as Polymorph
B. The Court noted that in the light of Section 3 (d) demonstration
of enhanced efficacy of the product. Although it was urged by the
plaintiffs that stability of a product is not the same thing as its
efficacy, it would have to be demonstrated by the Plaintiffs,
particularly in light of their statements in the application for
grant of a patent in respect of Polymorph B (and their statements
in the corresponding patent U.S.'221) that a compound of
Polymorphs A and B (and not A alone or B alone) could be orally
administered as a drug. The Court opined that it was impossible to
imagine that the therapeutic efficacy of a pharmaceutical product
could be tested without it even being able to be administered to a
sample population. Further, they noted that it was for the
Controller to consider the application for the grant of the suit
patent, for which he would have had to address the issue whether it
was the combination of Polymorphs A and B or Polymorph B alone
which satisfied all the patentability tests vis-ŕ-vis
Section 3 (d). The Court noted that the failure of Roche to bring
the relevant facts to the notice of the Controller of Patents at
the time of consideration of the application for patent for the
compound of a combination of Polymorphs A and B was inconsistent
with the requirement of a full disclosure. Considering the effect
of nondisclosure by Roche, they stated that a sufficient ground had
been made out to hold that Roche in fact failed to demonstrate
before the learned Single Judge and even before this Court that
notwithstanding the pending applications in respect of Polymorph B
which wholly corresponded to the tablet Tarceva, they had a prima
facie case.

The Court noted that when Roche proceeded to file their suit,
they were fully aware of the fact that Polymorph B was the more
stable form of Erlotinib Hydrochloride and that the tablet form,
was more suited to its marketing. The Court expressed that they
were intrigued that Roche chose not to be candid in making a full
disclosure in view of the facts in its plaint.

Cipla founded its argument in the proviso to Section 11 A (7) of
the Patents Act 1970. As an off shoot, they averred that Roche had
admittedly not commercially exploited the patent granted in their
favour for a compound which is a mixture of Polymorphs A and B,
since the tablet form corresponds to Polymorph B of the said
compound Erlotinib Hydrochloride. The Court was also of the view
that Cipla in this regard had raised a serious doubt whether Roche
in fact held a patent for the product sold in the tablet form as
Tarceva. In this regard, the establishment of a prima facie case to
favour the grant of an order restraining Cipla from marketing
Erlocip was said to have been defeated.

The Court further noted the facts of the application in respect
of Polymorph B which had been rejected by the Controller of Patents
and the ruling there under was noted, however refrained from
commenting on the Order. The order of the Controller was stated to
have no bearing upon the failure of Roche to make out a prima facie
case before the learned Single Judge. In this respect the Court
stated that they ought to have been refused an interim
injunction.

The Principles governing the grant of an injunction in an
infringement suit were also looked into in view of the facts of the
case, submissions made and precedents cited. The Court opined that
at the present stage of considering the grant of an interim
injunction, Cipla has to show that the patent that has been granted
is vulnerable to challenge. Consequently, this Court rejects the
contentions of the plaintiffs on this issue and affirms the
impugned judgment of the learned Single Judge.

The discussion on the validity of the patent was concluded by
concurring with the Single Judge that, assuming that Roche held a
patent for the product which was the subject matter of the suit for
infringement, Cipla raised a credible challenge to the validity of
the patent by raising a serious triable and substantial question
that renders it vulnerable to challenge.

Revisiting the Public Interest argument, the Bench opined that
the issues of public interest and pricing were not germane or
relevant in the context of patent law and that public interest was
significant in protecting a validly granted patent. Roche had
contended that if the rights of a patentee are not respected then
it would be contrary to the public interest of encouraging further
research. They also contended that generics having relatively low
research and development costs, hence its pricing was lower.
However, taking note of the fact that Roche imported the
life-saving drugs into India and did not manufacture the same in
the country, noted that the demand was fulfilled by relying on an
international transport system. The Court noted that in the event
of a grant of interim injunction the manufacturing and marketing
network established by Cipla would get dismantled. In the event of
the drug being unavailable in the required quantity in India, would
prove disastrous for the patients.

In consideration of the factors alluded, the appeal was
dismissed with costs quantified at Rs. 5 Lakhs to be paid by Roche
to Cipla within a period of four weeks.

The Patents Act 1970, along with the Patents Rules 1972, came into force on 20th April 1972, replacing the Indian Patents and Designs Act 1911. The Patents Act was largely based on the recommendations of the Ayyangar Committee Report headed by Justice N. Rajagopala Ayyangar. One of the recommendations was the allowance of only process patents with regard to inventions relating to drugs, medicines, food and chemicals.

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